IEK cuts output growth forecast for Taiwan's manufacturing sector

2018/04/19 22:14:24

Taipei, April 19 (CNA) The Industrial Economics and Knowledge Center (IEK) on Thursday lowered its forecast for the 2018 growth in production value of Taiwan's manufacturing sector, saying a global trade war could affect investment sentiment.

The IEK, which is under the government-sponsored Industrial Technology Research Institute, forecast an annual output growth of 3.29 percent in the local manufacturing sector this year to a value of NT$18.9 trillion (US$644 billion).

IEK analyst Chen Tzu-chiang (陳自強) said the forecast was cut by 0.2 percentage points from a January projection, in view of a possible trade war between the United States and China that would send ripples through the global financial markets, slow consumption and lower investment sentiment among enterprises.

U.S. President Donald Trump recently signed an order to impose tariffs on imported steel and aluminum, and then slapped additional tariffs on US$60 billion worth of China imports.

In retaliation, China has imposed tariffs on some U.S. products, including agricultural products from some U.S. states where support for Trump is strong.

Chen said the uncertainty caused by the trade frictions between the U.S. and China is expected to affect global demand and in turn hamper Taiwan's exports, which will slow export growth among Taiwanese companies.

As most of Taiwan's manufacturers are export-oriented, weaker outbound sales will lower production growth in the sector, he said.

Under such unfavorable circumstances, Chen said, demand for information/electronic devices, the largest export segment in Taiwan, is likely to weaken.

The IEK has forecast a 3.47 percent output growth in that segment in 2018, 0.49 percentage points lower than its forecast in January.

Meanwhile, the output growth of the local metal/electrical industries was lowered by 0.32 percentage points to 2.1 percent, and that of the chemical industry was cut by 0.21 percentage points to 5.09 percent, according to the IEK forecast.

On Wednesday, Citigroup chief economist Willem Buiter said in an interview on CNBC that a trade war between the U.S. and China would end the global economic recovery.